Sentiment toward steel stock X is resoundingly negative

Put activity was unusually heavy on United States Steel Corporation (NYSE:X) on Monday, with approximately 36,000 contracts crossing the tape -- or 1.59 times the stock's average daily volume. Most of the action took place at X's January 2015 10-strike put, where no fewer than 20,012 contracts were traded. Nearly all of these puts changed hands closer to the ask price, indicating they were purchased. This deep-out-of-the-money LEAPS strike added 19,360 contracts to open interest overnight, confirming the initiation of new long puts here on Monday.

This flurry of bearish speculation coincided with a fresh nine-year low for United States Steel shares, which dropped as far south as $15.80 on Monday -- in territory the stock hasn't explored since August 2003. X is attempting to bounce back from a negative start to the day, with the shares flat at $16.28 following some negative economic news out of China.

In fact, from a longer-term view, the shares have shed approximately one-third of their value year-to-date. Given this poor price action, it's no surprise to find that traders consistently prefer puts over calls on X. During the past 10 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.61 puts for every call on the steel stock. This ratio is currently lingering in the 99th percentile of its annual range, as options players have rarely shown a greater skew toward bearish bets over bullish.

In the same vein, short sellers are also heavily targeting the stock, with 25.6% of its float tied up in short interest.

Traders should stay tuned to X next week, as the company is due to announce its first-quarter results before the market opens on Tuesday, April 30. Analysts are bracing for a loss of 19 cents per share, but U.S. Steel has exceeded consensus estimates in each of its last four quarterly reports. With so much negativity levied against the stock, another upside surprise could spark a quick surge higher -- but with multiple layers of resistance looming overhead, any post-earnings pop could be short-lived.